The Unemployment Road Map, Part 5: Timely, Sufficient and Adequate Responses
Even the best employment relationships can end and sometimes, when they do, they can result in the former employee filing for unemployment benefits. If you have received an unemployment benefits claim and are not experienced with the process, you will likely have some questions. This blog series, The Unemployment Road Map, is a resource that TriNet offers to provide you with guidance on this journey.
In late 2009, an executive order was signed by President Obama to reduce improper payments in programs administered by the federal government. Since then, the Department of Labor (DOL) and state workforce agencies have focused on the integrity of payments made by the Unemployment Insurance (UI) program. An additional directive, made in 2011, delivers the expectation that every state will evaluate the causes of improper benefit payments and carry out action plans to reduce these payments. To ensure continued federal funding and successful implementation of the federal mandates, states are shifting responsibility for UI integrity to employers by enforcing more stringent penalties for noncompliance.
Why your responses matter
The integrity of a state unemployment program is measured by the accuracy of unemployment benefit payments and denied claims. States are under pressure to ensure benefit claims are decided correctly and improper benefits are kept to an absolute minimum. The DOL monitors UI integrity with audit procedures designed to determine the accuracy of claims to control expenses caused by overpaid claims.
Separation issues represent the largest cause of overpayments that employers can control. Inaction on the part of employers, including either the failure to respond to state requests for information or responding with inadequate information, can contribute significantly to benefit overpayments.
As claimants provide most of the information that agencies use in determining eligibility for UI benefits, your timely, complete and accurate response is critical. Benefit overpayments not only impact employer state account reserves, but the entire state trust fund balance. Some benefits paid are never charged to an individual account, or they are charged to inactive employers. This means that all tax-paying employers share the burden of these unemployment costs.
Fortunately, there are several ways to prevent unnecessary unemployment benefit overpayments. These include:
- Providing timely, accurate and complete documentation in response to all claims
- Providing employee training regarding how to respond to requests from state agencies most effectively
- Using SIDES (State Information Data Exchange System), which expedites the delivery of critical claims information while supporting data integrity
- Responding promptly to wage verification requests
- Reporting new hires and re-hires to state agencies within 20 days
Adherence to these guidelines will not only reduce overpayments from state funds, but will help improve the state agencies’ efficiency in administering the process.
When a claim is received, the most important thing to look for is the deadline for response. Even if you have all the proper documentation to prove cause for termination, it may not matter if the deadline is missed. It is important that employers know what these documents are and provide them to the person responsible for handling claims immediately. If your company uses SIDES, it is vital to check the system for any outstanding requests for information periodically.
In some states – if mitigating circumstances exist – an employer may be able to request additional time to respond. However, most states strictly adhere to the deadline on the claim and in some states there is a financial penalty for missing a claim deadline. For example, Maryland assesses a $15 fee for not returning a separation notice (the state request for information once a claim is filed.)
Sufficient and/or adequate responses
States require that employers provide all relevant information regarding a claimant’s separation in response to a notification that a claim has been filed, or the initial claim level. This allows the state to make a correct initial decision on a benefits claim. Even if you have decided not to protest the claim, you must provide a complete account of the separation and the reasons for it. This actually works in favor of employers because it prevents unnecessary time spent in unemployment hearings and can reduce benefit charges.
Unemployment claims vendor Equifax has monitored determinations that found that a claim response was insufficient or inadequate under the law. They have provided some examples below. The words “inadequate” and “insufficient” are used based on state preference. These examples should offer some guidance regarding the separation information needed in response to a benefit claim.
Example 1: voluntary quit
- The claimant quit voluntarily because they did not like the scheduled work hours.
- The employer’s responded: “The claimant quit voluntarily for personal reasons.”
- The adjudicator contacted the employer for additional information regarding the claimant’s hours of work, but the employer did not respond to the state’s request.
The state found this response to be insufficient because the employer did not provide any information to explain or contradict the claimant’s allegation that their employer caused them to leave work. Though the claimant has the burden to prove they quit with good cause, any information the employer has regarding a claimant’s resignation should be provided in response to the claim.
Example 2: voluntary quit vs. discharge
- The claimant was allowed to resign their position instead of being discharged for violating one of the employer’s policies.
- The employer responded: “The claimant quit voluntarily for personal reasons.”
The state found this response to be inaccurate, and therefore inadequate, because there was no continuing work available for the claimant at the time of the separation. The details regarding the final incident which led to the decision to discharge should have been provided, along with any relevant documentation including warnings, the policy which was violated and proof the claimant was made aware of the policy.
Example 3: voluntary quit vs. discharge
- The claimant did not call or show up to work for three consecutive days.
- Under the employer’s policy, which the claimant received at hire, three consecutive days of no calls and no shows was considered a voluntary termination.
- The claimant returned to work after the three days and was informed of their resignation under the policy.
- The employer responded: “The claimant abandoned their job.”
- No additional details were provided.
The state found this response to be inadequate because the claimant was discharged when they attempted to return to work. The claim response should have included the specific days the claimant was absent without notification, the policy and the claimant’s acknowledgment of having received the policy.
Example 4: discharge
- The claimant was discharged for violating the employer’s conduct policy.
- The employer responded: “The claimant was discharged for inappropriate and unprofessional conduct when they sent an offensive text message to their supervisor.”
The state found this response to be insufficient because the text message itself was not provided. The state needed to see the message to determine if it was so offensive as to constitute disqualifying misconduct.
Example 5: discharge
- The claimant was discharged for violating the employer’s attendance policy, which stated that upon reaching a certain number of “points,” an employee would be discharged.
- The policy included progressive discipline.
- The employer responded: “The claimant accumulated 15 points under our attendance policy, which is grounds for termination.”
- The employer included the claimant’s prior warnings, the policy and the claimant’s acknowledgment of policy.
The state found this response to be inadequate because the employer provided no detail regarding what the points were assessed for. The employer failed to provide the dates of the occurrences and whether each occurrence was a tardy or an absence. Of particular importance is the final incident that led to the decision to discharge, and detail regarding that incident was necessary in this case. Some states require that the employer provide the reasons that the claimant gave for the incidents, if available.
These requirements are truly a win for all tax paying employers. When followed, they are designed to reduce improper payments to claimants. This lowers liability to individual corporate accounts and the UI trust fund account as a whole. If you are documenting performance issues and skill gaps properly for each employee, providing this information to the state when requested becomes as simple as scanning and emailing. Watch for The Unemployment Road Map Part 6, which addresses determinations.
This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.
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